Through the start of bitcoin and its inexplicable rise, we have seen thousands of new cryptocurrencies enter the market. With over 6000 coins available to trade with, the accessibility of the blockchain technology which allows its use has allowed for success stories such as Ethereum, Tether and XRP among others.
However, just like bitcoin was not happy to just sit at $1, blockchain tech was not happy with a single use, instead evolving to invent an entirely new market. In 2014 we saw the minting of the first ever NFT and around five years later they entered the public consciousness to become mainstream. We are now seeing some of the biggest actors and actresses, musicians and athletes enter the world of NFTs— backing projects, buying tokens and even creating their own collections and marketplaces.
Although they have been a part of pop culture for a couple of years now, there may still be some of us who don’t quite understand yet. Well look no further for here are 10 key facts you need to know about NFTs.
What is an NFT?
Starting off with the basics— what exactly does non-fungible token mean? Well, NFTs are digital pieces of art that hold value, just like physical art. They could come in the form of an image, a gif, a video or even a piece of music and they are all completely unique. They are ‘non-fungible’ in that they cannot be traded for something identical. Think of them as Crypto-baseball cards.
What types of NFTs are there?
Whilst most NFTs come in the form of an image, there are plenty that could come in the form of a GIF, video, a piece of music and many more. As blockchain tech becomes even more sophisticated and accessible it is likely we will see even more especially with gamified NFTs picking up some steam as of recent.
How do you purchase an NFT?
You pay through a digital wallet using cryptocurrency, namely ETH, which is what most tokens are sold for. It is very quick and easy to startup your wallet with plenty of smartphone apps available to download to view your wallet instantly.
Where can I buy an NFT?
There is a tonne of places you can buy your tokens from called marketplaces. An NFT marketplace is just as it sounds, most marketplaces sell their tokens via ‘drops’, with specific collections becoming available for auction for customers on a specific date and time. Simply get in the online queue before the auction starts and you are ready to bid.
How do you create an NFT?
Creating an NFT is not as difficult as it may seem. After starting a crypto wallet to engage in token transactions, create your image, video, piece of music etc. and then sign up to an NFT auction platform. Most platforms will require you to pay upfront to ‘mint’ an NFT, which is the process that turns your artwork into a non-fungible token that you can sell. This can range from five cents to $150. After completing this and minting your token you are ready to sell your NFT.
Collections are limited
Most of the popular NFTs are released in collections. This is where a number of unique tokens are released to be bid on at one time. Most NFT collections aim to release 10,000 individual artworks. But as a collection gets more and more popular, demand for a limited asset drives up the price.
Celebrities are deeply involved
It did not take long for some of the most famous faces in the world to jump on the NFT express. Reese Witherspoon, Eminem, Lebron James, Tom Brady— it is a who’s who of fame and fortune. They are not just buying but also creating their own collections too.
They are not fool proof
Whilst many people immediately think of dollar signs when you talk about NFTs, it is important to note that it is not guaranteed that every purchase is a money maker. Be sure to calculate the risk and reward of each individual token and collection before you rush in to buying and never spend what you cannot afford to lose.
Not every token will cost a fortune
As is the nature of the news, we are only likely to see the bigger stories in the world of NFTs which revolve around huge sales and collections. However, you can purchase tokens for as little as a dollar. Not every big purchase is a good investment so start small just for the enjoyment of owning it.
What is the future of NFTs?
The future of NFTs looks bright. With thousands of tokens created per week, the market is flourishing, and new artists are coming through often. Tokens are still being innovated to create new ways to purchase and view your NFTs, meaning we are in for exciting times ahead.